Family Affair

The Idaho Supreme Court

This appeal and cross-appeal concern the enforceability and severability of an alleged employment agreement, unpaid wages, and a denial of a request for attorney fees. Four former employees (“Employees”) of Litster Frost Injury Lawyers (“LFIL”) filed suit against LFIL and its former sole shareholder Martha Frost, also known as Laurie Frost, (collectively “Litster Frost”) alleging that LFIL owes them compensation in the form of wages, bonuses, profit sharing, and other expenses incurred while employed.

The district court granted summary judgment in Litster Frost’s favor. First, the district court concluded that Employees’ claims for unpaid wages and unreimbursed expenses were time barred by the one-year statute of limitations set forth in Idaho Code section 45-614, part of the Idaho Wage Claim Act (“IWCA”). Second, the district court concluded that the written “Term Sheet” advanced by Employees as an employment contract was an unenforceable and nonseverable “agreement to agree.” Litster Frost subsequently requested an award of attorney fees under Idaho Code section 12-120(3). The district court rejected this request, concluding Idaho Code section 45-612 provided the exclusive remedy available to an employer for attorney fees when an employee has brought a claim for wages

Employees appealed Litster Frost cross-appealed and argued the district court erred in denying their request for attorney fees under section 12-120(3) following summary judgment.

The Idaho Supreme Court vacated the judgment of the district court and reversed its decisions in part. First, the Court reversed the district court’s decision granting summary judgment on Sarah Litster King’s claim for reimbursement because issues of material fact exist as to whether the claim fell within the ambit of section 45-614. However, the Court affirmed the district court’s grant of summary judgment in all other respects. Next, the Court reversed the district court’s denial of Litster Frost’s request for attorney fees under Idaho Code section 12-120(3), holding the district court did not apply the correct legal standard applicable to its decision based on statutory revisions to the wage claim statutes. The Court remanded the case for further proceedings consistent with its opinion.

All in the family

Prior to 2008, attorney William J. Litster (“Bill”) operated the Law Offices of William J. Litster P.A., dba “Litster Injury Lawyers.” Bill’s law firm employed numerous non-lawyer members of the Litster family, including (1) Jeremy, who was the Director of Operations for the firm; (2) Joe, who worked as a legal assistant on insurance claims; (3) Sarah, who was employed by Bill as a runner and janitor; and (4) Ryan, who was employed as a runner, janitor, and assistant to Jeremy. In March of 2008, Bill asked attorney Martha Larell Frost, AKA Laura Litster Frost  (“Laurie”), his sister, to move to Boise to work for his firm, which she agreed to do. Sometime in 2008, Bill disclosed to Laurie that his law license was being suspended and requested that she take over the firm. Thereafter, Laurie founded LFIL and hired most of the staff from Bill’s firm.

On June 2, 2009, LFIL hired Jeremy as its Director of Operations. A month later, on July 1, 2009, LFIL hired Sarah, Joe, and Ryan. Sarah was hired as a part-time employee with janitorial and other duties, but later transitioned to full-time employment as an assistant office manager. Joe was hired as an at-will independent contractor, whose job duties included communicating with insurance companies as a legal assistant. Ryan was hired to assist with bookkeeping and marketing and later became a full-time assistant bookkeeper to Jeremy Litster. Each employee worked at LFIL in their various capacities until December 13, 2018.

Over time, Laurie’s and Jeremy’s relationship deteriorated and there were “constant disputes about office management and financial accountability.” Other family member employees were pulled into these disputes. Laurie claims that she eventually came to view Jeremy’s job performance as “substandard,” that he “failed to institute basic business control and reporting and accountability measures” and was often abusive to employees and to Laurie. Laurie alleged that “[t]hese issues became more pronounced over the years, especially after [Jeremy] began law school in 2017 . . . .”

On December 13, 2018, Litster Frost terminated Employees. Litster Frost provided Jeremy with a Release and Separation Agreement offering $75,000.00 to release LFIL from any liability related to his termination. Following their termination, Laurie claims that Employees “began retaliating in ways that threatened to destroy LFIL[,]” such as encouraging other employees to resign and contacting medical providers who treated LFIL clients and reporting “that LFIL was imploding.” LFIL’s attorney employees told Laurie “they were at risk of malpractice without staff support and recommended that [she] re-employ Jeremy, Joe, Sarah, and Ryan. According to Jeremy, LFIL “began to delve into chaos and the majority of the firm’s [thirty-five] employees began looking for other employment.”

Three days later, Laurie began negotiations to re-hire Employees, and, on December 31, 2018, Laurie and Jeremy executed a four-page document entitled “Term Sheet.” The Term Sheet consisted of thirty-two paragraphs, which largely addressed three main subjects: (1) terms of reemployment, such as Employees’ compensation, benefits, and responsibilities; (2) terms for granting Jeremy “an exclusive right of refusal to purchase” LFIL after he passed “the bar exam”; 3 and (3) terms for firm management and dispute resolution